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Regional GuidesJanuary 13, 20258 min read

Australia Home Loan Guide: Rates, Tax Benefits & Tips

Navigate Australian home loans with confidence. Learn about variable vs fixed rates, first home buyer grants, and calculate your repayments in AUD.

Australian Home Loan Market 2025

Australia's home loan market is competitive and diverse, offering various products for different buyer needs. Understanding your options helps you secure the best deal.

Current Interest Rates (AUD)

  • Variable Rate: 5.5% - 7.0%
  • Fixed Rate (1-3 years): 5.8% - 6.5%
  • Fixed Rate (4-5 years): 6.0% - 6.8%
  • Investment Property: Typically 0.3-0.5% higher

Variable vs Fixed Rate Loans

Variable Rate Advantages:

  • Benefit from rate decreases
  • Flexible repayment options
  • Offset accounts available
  • No break fees for extra repayments

Fixed Rate Advantages:

  • Certainty in budgeting
  • Protection from rate increases
  • Peace of mind
  • Can split loan (part fixed, part variable)

First Home Buyer Schemes

First Home Guarantee (FHBG):

  • Buy with just 5% deposit
  • Avoid Lenders Mortgage Insurance (LMI)
  • Government guarantees up to 15% of property value
  • Price caps apply (varies by location)

First Home Owner Grant (FHOG):

  • One-off payment to first home buyers
  • Amount varies by state ($10,000-$20,000)
  • Usually for new or substantially renovated homes
  • Eligibility criteria apply

Stamp Duty Concessions

Most states offer stamp duty concessions or exemptions for first home buyers:

  • NSW: Full exemption up to $800,000, concessions to $1 million
  • VIC: Full exemption up to $600,000, concessions to $750,000
  • QLD: Concessions for properties up to $550,000
  • WA: Various concessions available

Loan Features to Consider

Offset Account: Savings account linked to your loan. Balance offsets loan interest, reducing interest charged.

Redraw Facility: Access extra repayments you've made. Useful for emergencies or renovations.

Split Loan: Divide loan between fixed and variable rates to balance security and flexibility.

Interest-Only Period: Pay only interest for initial period (typically 1-5 years). Useful for investors or during renovations.

Borrowing Capacity

Australian lenders typically assess:

  • Income (including rental income for investors)
  • Existing debts and commitments
  • Living expenses (using HEM benchmark)
  • Credit history and score
  • Employment stability

Lenders Mortgage Insurance (LMI)

Required when borrowing more than 80% of property value:

  • Protects lender, not borrower
  • Can cost $2,000-$30,000+ depending on loan size
  • Can be added to loan amount
  • Avoided with 20%+ deposit or FHBG

Tax Considerations

Owner-Occupied: No tax deductions available for interest or expenses.

Investment Property:

  • Interest payments tax deductible
  • Negative gearing benefits
  • Depreciation deductions
  • Capital gains tax on sale (50% discount if held 12+ months)

Calculate Your Australian Home Loan

Use our calculator set to AUD to estimate your repayments. Factor in your deposit, interest rate, loan term, and any offset account balances to see your true monthly cost.

Tips for Australian Borrowers

  • Compare rates from banks, credit unions, and online lenders
  • Consider using a mortgage broker (often free service)
  • Check comparison rate, not just interest rate
  • Review your loan annually for better deals
  • Make extra repayments when possible to save on interest